Commodity Morning Trading Guide | Globe Capital
12-Jul-2022
Commodity Morning Trading Guide

Bullion counter may witness some short covering at lower levels as investors will eye the outcome of US inflation data tomorrow.

Report Overview

BULLIONS

Gold hit a new nine-month low on Tuesday, as the U.S. dollar at a 20-year high stifled demand for bullion, but a slight recovery in the euro against the greenback limited further losses. The euro was near parity to the dollar amid concerns that an energy crisis could tip Europe into recession, while the U.S. Federal Reserve continues to aggressively tighten policy to curb inflation. Strength in the dollar makes greenback-priced gold more expensive for buyers holding other currencies. U.S. consumer price index data, a key measure of inflation, is due Wednesday, and is expected to show prices rose 8.8% in June from a year earlier. Recent inflation data has not been encouraging, Atlanta Fed president Raphael Bostic said on Monday, saying the lack of month-to-month improvement in the pace of price increases warrants another 0.75 percentage point increase in the federal funds rate when policymakers meet later this month.

BASE METALS

Copper prices fell recently weighed down by a stronger U.S. dollar, rising COVID-19 cases in top consumer China and lingering concerns that rapid interest rate hikes would lead to a global economic slowdown. The picture from key industrial metals is that the stimulus that is likely to be rolled out by China isn’t enough to spark a price rally, and that the demand outlook is still far from rosy. Confidence in China’s economic momentum is ebbing away, and it will likely take stronger action from Beijing to restore it. Copper output at Peru’s huge Las Bambas mine has returned to normal levels after a two-month shutdown due to protests was ended last month, sources and power usage data show, but talks over a deal with community leaders have stalled. Atlanta Federal Reserve Bank President Raphael Bostic, until recently among the central bank’s most dovish policymakers, on Friday said he “fully” supports another three quarters of a percentage point interest rate rise.

ENERGY

According to U.S. Energy Information Administration” U.S. crude oil production slid in April by about 0.5% to its lowest since February” Oil production fell to about 11.6 million barrels per day in April from nearly 11.7 million bpd the month prior. Production in North Dakota sank 19.3% to about 900,000 bpd, its lowest since June 2020, the report showed. That was the biggest month-over-month decline since May 2020. Monthly gross natural gas production in the U.S. Lower 48 states rose 1.0 billion cubic feet per day (bcfd) to 107.3 bcfd in April, its highest since December 2021, the EIA said in its monthly 914 production report. Natural gas may remain on stronger note as Russia is turning off a key pipeline carrying natural gas to Germany for annual maintenance on Monday but unlike previous years, Europe fears it may not come back on again.

 

 

 

 

 

 

 

 

 

 

 

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